Vertical Integration in Business

 

Vertical Integration pic
Vertical Integration
Image: investopedia.com

As CEO of PBS SA Capital Group and President of Portland Marine Group, Alexander Christodoulakis oversees a varied portfolio of companies, with primary interests in the Transportation,shipping and energy industries. Alexander Christodoulakis utilizes a vertically integrated management system to provide financial growth and effective capital optimization within the business portfolios under the management of PBS SA Capital.

Vertical integration is a strategy used by corporations to streamline business and reduce costs. If a business has a product or service that requires several different steps, vertical integration posits that by bringing those steps “in house,” the need for outside vendors or services is eliminated, thereby increasing supply chain movement and reducing costs.

A manufacturing company that owns both supplier and distributor of its product is an example of vertical integration. For instance, if a company produces a device that requires a particular chip to make it work, by making the chip or parts for the chip within the same corporation, it will have greater control over production speed. Further, if the same company also creates a distribution center, not only does it increase supply chain speed, but it also reduces transportation expenses.

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